Igor Mintusov: ‘The state should take steps to support small businesses’

“People are very frightened about what’s going on”

Mr Mintusov, what’s your impression of the feelings of Russian citizens caused by the special operation in Ukraine?

The majority of Russia’s population supported the special operation, according to my observations, it is about 70%, but at the same time these people are very frightened about what is going on.

How solid is the foundation for fear of the future? What should we be waiting for?

We should be ready for a significant and rapid worsening of the quality of life during the year. I think in a year the situation with a fall in the quality of life will stabilise and the quality of life will continue decreasing but at a lower pace.

As the competition of goods is the key moment of the market, it provides a fall in price. And when the competition becomes limited, the quality of goods falls, the assortment of goods worsens or prices go up

We won’t die from hunger, but the quality will get worse

There have been a lot of information about what we, Russians, are losing as a result of the sanctions. Are these losses really tragic or are those who truly suffered from hunger in the 90s right and being ironic about the exit of Ikea and McDonald’s today?

It isn’t clear completely what foods or consumer goods this will really influence. Everything will get clear in the next weeks. And everything will get completely clear in a few weeks and months. I mean not only bread, potato and other staples that are produced in Russia but consumer goods with components manufactured by foreign companies. For instance, imported water we got used to drink, so there will be no water.

Perhaps, we can count on some import substitution in this area.

The experience shows that import substitution leads to a price rise if the quality remains the same because competition in this assortment goes down. When imported commodities disappear, a local producer of goods from the same group has motivation to raise prices. If the state, of course, doesn’t start strictly regulating them. And the picture isn’t optimistic here, since nothing good happens to the market in case of strict price regulation in the next 3-10 years. As the competition of goods is the key moment of the market, it provides a fall in price. And when the competition becomes limited, the quality of goods falls, the assortment of goods worsens or prices go up.

But won’t this lead to empty shelves like under Gorbachyov in the late 80s?

The quality of life in general will decrease because of growing prices or high-quality European products will be replaced with worse ones.

In the end, why should we build planes if they can be bought? And now a question arises, where to fly in general?

Don’t we need our planes?

Do you think the sanctions can become an impulse to revive the heavy industry in the country? For instance, Kazan is a city of plane engineers, but we don’t use our planes but old Boeings and Bombardiers?

The thought that the special operation and its consequences provide such a chance seem to me very naive. Look, every effort has been put in Russia in the last 15 years to revive aircraft engineering, we have made Superjet. But there must be a market of planes besides the planes. Talking about the Superjet, as far as I am concerned, 30, 40 planes were made first, then 80 a year were produced. While competitors in this class, for instance, Embraer, makes 300-600 planes a year. It is hard to compete with it: the fewer planes, the more expensive. It is a long story to enter the market with our planes, it takes years. In the end, why should we build planes if they can be bought? And now a question arises, where to fly in general? As for domestic airlines, as I understand, now the state is nationalising the planes we leased. So there will be enough planes operating domestic flights.

Foreign passport as marker of middle class

The concept of middle class is critically different from the European one. Won’t our middle class disappear as class?

I mean particularly those who have foreign passports our not numerous middle class. It is such a funny criterion: if a person goes on holiday at least to Turkey or Egypt, it is our middle class, with the living standard above the certain bar. According to surveys and statistics, as far as I remember, about 20% of the population have been abroad even once in the last five years, which is not much. As for remote countries, the number is twice lower — about 10%. And these citizens will feel discomfort because they will feel significant difficulties when going abroad both with the possibility of flying and the availability of free money, which will objectively worsen their quality of life.

We have been hearing talks about the necessity of supporting Russian producers, investments in production for ten years. But since this area is deeply corrupted, a big class of functionaries live on exactions

What prospects do Russian whose quality of life falls short of the middle class even by the most modest standards and not employed in legal production have? For instance, a lot of people who worked illegally for a long time but became legal with the introduction of self-employment.

It is a significant amount of market players, and the question is if they will be given a chance to earn now. Perhaps, they will be given, but from my point of view, the credibility gap among the Russian state regarding domestic economic politics is going down. We have been hearing talks about the necessity of supporting Russian producers, investments in production for ten years. But since this area is deeply corrupted, a big class of functionaries live on exactions of what is called a small business. I think now the state should take some steps to support these businesses, but given my life experience, I am quite pessimistic about these attempts and I will be happy to be wrong.

What will happen if the pessimistic forecast becomes a reality?

This social group will be marginalised as well as the society in general. It will increase in size. Street crime will suddenly soar like in the 90s. The sum because of which the number of smashed heads and robbed flats will rise won’t be 50,000 but 5,000 or 10,000 rubles. It will be far worse if the state cannot pay for the work of the police well if their salaries aren’t raised. They will have no motivation to deal with street crime, and the suburbs, the periphery can go back to the 90s in this sense.

“Where we go” with university diploma

Entrepreneurs often complain that it is hard to find young professional workers for a factory. Is this a catastrophe? Have we passed the point of no return for a large-scale revival of the basis of the economy — the heavy industry — which in the light of sanctions is becoming more topical?

The answer to this question has nothing to do with the sanctions, it is an issue that has been hot-button at least in the last 10-15 years. Over this time, the state has put effort to restore the prestige of a college degree and other vocational institutions for instance, international competitions started to be held: so WorldSkills Russis was hosted in Kazan. But I am not ready to say how efficiently this programme works, I don’t have the sufficient expertise. The only thing I can say is that in the last three years I haven’t seen changes either for the better or the worse in the deficit of professional workers.

There are competitions, but there are a lot of sellers with a university degree, while a qualified lathe operator cannot be found.

I don’t think it is bad that I am serviced by a seller with a university degree or a taxi driver with a university degree. It is bad we don’t have highly qualified bricklayers, carpenters, painters, plumbers. A plumber in the West is equipped like a doctor. Here the problem is that the quality of college education remains low.

I see advantages in the state exams. As the statistics read, in the last few years, the number of students from other cities in the biggest and regional university has increased, corruption is gone

“The Unified State Exams aren’t the reason for the low quality of school education”

How fair are parents’ reproaches that the education system works worse year after year?

I don’t consider myself a specialist in educational reforms, though this year it will be the tenth anniversary since I started teaching at Saint Petersburg State University. I cannot say that in the last 10 years students’ training has decreased. While I think school education is much worse than Soviet school education today, especial in humanities. As a person who graduated from a Soviet school, in this regard I look down on my Western colleagues who have the same age and feel I am five times more educated than they are. While a graduate from a Moscow school, for instance, finished it with a good score last year answered my question about WWI that it was either in 1937 or 1938...

Is the Unified State Exam or standardised approach, as many think, the reason?

No, I don’t think so. I see advantages in the state exams. As the statistics read, in the last few years, the number of students from other cities in the biggest and regional university has increased, corruption is gone.

“Freedom and law are needed”

Today it feels like foreign politics of the administration and Russian president is popular among the people, moreover, the authorities’ domestic politics causes discontent and harsh criticism among many. What should the authorities do so that there is trust?

Grigory Yavlinsky once voiced a talk with the president of the Russian Federation in the 2000s. Then Mr Putin asked him: “What should be done with the economy?” and asked to formulate the answer in two words. He answered: “Freedom and law.” The president shook his head: “Here in Russia, this won’t happen.”